Daily Editors' Notes

Bed taxes and other troubling compromises

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John O'Connor
John O'Connor

As my colleague Tim Mullaney reported last week, the Government Accountability Office has been taking a closer look at Medicaid bed taxes lately. And the investigative arm of Congress doesn't seem to care much for the view.

What most concerns investigators is the way this revenue enhancer is redirecting more of the long-term care tab from states to the federal government.

Whether you are a fan or a foe of the concept, you have to appreciate the creative thinking behind it. Surely Charles Ponzi (he of Ponzi scheme fame) must be wondering why he never came up with something similar.

The basic idea works like this: nursing homes (usually through prior agreement) pay the state an extra Medicaid fee, determined by bed count. Why would providers agree? Because this additional “tax” helps trigger even greater matching federal funds. The state can kick back the additional largess in whole or in part to the participating providers. Did I say kick back? How about distribute?

As you may have guessed, I have mixed feelings about bed taxes. What's good about them is they give long-term care providers much-needed funding. What's bad about them is pretty much everything else.

Are they illegal? No, but neither are cigarettes. And I wouldn't recommend smoking either.

Are they immoral? That's a tougher question. In my view, they are, as they rely on an accounting loophole.

Are they bad policy? Absolutely, for the reason just cited.

Are they necessary? Probably. Otherwise the additional funds they help direct toward facilities would either not exist, or would need to be generated elsewhere. And Congress is not exactly tripping over itself these days to enhance Medicaid support. So bed taxes are likely here to stay, and may even take root elsewhere. Still, it's easy to see why some might feel that operators are trading integrity for dollars.

As it happens, I'm currently in the middle of a biography about the late John Wooden. For those of you who are not sports fans, he coached the University of California at Los Angeles men's basketball team to an unprecedented 10 championships. As amazing as that feat is, it doesn't capture how truly dominant those UCLA teams really were. Consider: Four of his clubs went undefeated, three suffered a single loss, two finished with two defeats and one club had three. As coaches like to say, that's getting it done.

But what attracted me to the book was a chance to learn more about the man. I had heard of his Pyramid of Success, his disavowance of liquor and profanity, and his reputation as one of the gentlemen of the game. Wooden: A Coach's Life certainly illustrates those traits. But it also reveals some disturbing character flaws: he routinely baited referees, chided opposing players, and as it turns out, bent his iron-clad rules when All Americans happened to be involved.

Yes, Wooden was a man of great integrity and achievement. But he was also human. And like most mere mortals, he sometimes compromised long-held principles to thwart a potential crisis. Oh well, it happens.

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Daily Editors' Notes

McKnight's Daily Editor's Notes features commentary on the latest in long-term care news. Entries are written by Editorial Director John O'Connor on Monday and Friday; Staff Writer Tim Mullaney on Tuesday, Editor James M. Berklan on Wednesday and Senior Editor Elizabeth Newman on Thursday.

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